Banks pledge stable lending rates

Lending interest rates have been kept stable

No pressure

The fact that several small commercial banks increased deposit interest rates in the first quarter of this year appeared to suggest a potential for increased lending rates, too. However, at a meeting last month with the State Bank of Vietnam (SBV), commercial bank representatives said there is no pressure on increasing interest rates.

According to the SBV’s Monetary Policy Department, in the first quarter of 2017, several small commercial joint stock banks slightly increased their deposit interest rates, while all state commercial banks and major commercial joint stock banks kept their deposit interest rates unchanged, further indications that there is no pressure on increasing lending interest rates.

According to a business trend survey of credit institutions carried out by the SBV’s Statistics Department in the second quarter of 2017, most credit institutions expected the banking system’s liquidity will continue to augur well for both the Vietnamese dong and foreign currencies. Good liquidity is crucial for keeping deposit interest rates and input capital costs stable in order to maintain marginal profit and create resources for dealing with bad debts in the future. This is also one of the prerequisites for keeping lending interest rates stable.

Supervision and intervention

State commercial joint stock banks have kept their lending interest rates unchanged since late 2016.

General director of the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank), Le Duc Tho, said VietinBank has been keeping its deposit interest rates unchanged since September 2016 while continuing to maintain its stable lending interest rates, including US dollar-based lending interest rates. Deputy general director of the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Pham Thanh Ha, said Vietcombank is offering a 6.5-percent lending interest rate in some specific fields, and the rate of short-term capital used for medium and long-term loans at the bank is 30 percent plus.

Representatives of some commercial joint stock banks, including the Vietnam Technological and Commercial Joint Stock Bank (Techcombank), the Military Commercial Joint Stock Bank (MB), the Saigon-Hanoi Commercial Joint Stock Bank (SHB), and the Tien Phong Commercial Joint Stock Bank (TPBank), said they are still keeping their interest rates stable and have no plans to increase or adjust them.

According to the SBV’s deputy governor, Nguyen Thi Hong, to ensure reaching economic growth targets, and following the government’s guidelines, early this year the SBV set a target of keeping interest rates stable or even decreasing lending interest if possible. “The SBV will continue to keep stable interest rates and has necessary conditions to manage the market towards the target’s fulfillment,” said Hong.